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Green Credit, Debt Maturity, and Corporate Investment—Evidence from China

Author

Listed:
  • Enxian Wang

    (Institute for Financial and Accounting Studies, Xiamen University, Xiamen 361005, China)

  • Xinghe Liu

    (School of Management, Xiamen University, Xiamen 361005, China)

  • Jiapeng Wu

    (School of Management, Xiamen University, Xiamen 361005, China)

  • Danting Cai

    (School of Hotel and Tourism Management, the Hong Kong Polytechnic University, Hong Kong 999077, China)

Abstract

Against the backdrop of working hard to build a beautiful country, this paper uses the promulgation of the “Green Credit Guidelines” policy in China as a quasi-natural experiment. Based on a difference-in-differences (DID) model, the results show that, since the promulgation of the Green Credit Guidelines policy, financial institutions have significantly reduced the proportion of long-term debt to heavily polluting enterprises for reasons such as risk aversion and total credit constraints. Due to capital constraints and the restrictive terms of credit approval, the Green Credit Guidelines policy reduces the investment scale and overinvestment of heavily polluting enterprises. The dependency relationship of the debt maturity structure of heavily polluting enterprises with the investment scale and investment efficiency has been reduced. Furthermore, the negative net effect of the Green Credit Guidelines policy on long-term debt is more pronounced in heavily polluting enterprises that lack political connections. However, the promulgation of this policy inhibits the investment scale and the investment efficiency of heavily polluting enterprises (with or without political connections). To a certain extent, these results confirm the “supportive hand” perspective towards political connections. The results of this research could help relevant government departments to understand the microeconomic consequences of the Green Credit Guidelines policy and could help improve and perfect China’s green credit policy.

Suggested Citation

  • Enxian Wang & Xinghe Liu & Jiapeng Wu & Danting Cai, 2019. "Green Credit, Debt Maturity, and Corporate Investment—Evidence from China," Sustainability, MDPI, vol. 11(3), pages 1-19, January.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:3:p:583-:d:200079
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    2. Xiaoyang Xu & Yufan Xie & Emma Serwaa Obobisa & Huaping Sun, 2023. "Has the establishment of green finance reform and innovation pilot zones improved air quality? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    3. Xingyuan Wang, 2022. "Research on the impact mechanism of green finance on the green innovation performance of China's manufacturing industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2678-2703, October.
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    5. Yan Yang & Yingli Zhang, 2022. "The Impact of the Green Credit Policy on the Short-Term and Long-Term Debt Financing of Heavily Polluting Enterprises: Based on PSM-DID Method," IJERPH, MDPI, vol. 19(18), pages 1-18, September.
    6. Shixian Ling & Guosheng Han & Dong An & William Cannon Hunter & Hui Li, 2020. "The Impact of Green Credit Policy on Technological Innovation of Firms in Pollution-Intensive Industries: Evidence from China," Sustainability, MDPI, vol. 12(11), pages 1-16, June.
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    8. Su, Chi-Wei & Li, Wenhao & Umar, Muhammad & Lobonţ, Oana-Ramona, 2022. "Can green credit reduce the emissions of pollutants?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 205-219.
    9. Shi, Jinyan & Yu, Conghui & Li, Yanxi & Wang, Tianhe, 2022. "Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
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    12. Jing Sun & Ningning Zhai & Jichao Miao & Huaping Sun, 2022. "Can Green Finance Effectively Promote the Carbon Emission Reduction in “Local-Neighborhood” Areas?—Empirical Evidence from China," Agriculture, MDPI, vol. 12(10), pages 1-13, September.
    13. Chen, Di & Hu, Haiqing & Wang, Ning & Chang, Chun-Ping, 2024. "The impact of green finance on transformation to green energy: Evidence from industrial enterprises in China," Technological Forecasting and Social Change, Elsevier, vol. 204(C).
    14. Peng, Changhong & Zhang, Shuqin & Rong, Xueyun & Chen, Dongjing, 2024. "Is China's green credit policy effective? -Based on the perspective of enterprise environmental performance and economic performance," International Review of Economics & Finance, Elsevier, vol. 94(C).
    15. Chenggang Wang & Guitao Qiao & Mahmood Ahmad & Zahoor Ahmed, 2023. "The Role of the Government in Green Finance, Foreign Direct Investment, Technological Innovation, and Industrial Structure Upgrading: Evidence from China," Sustainability, MDPI, vol. 15(19), pages 1-24, September.
    16. Da Gao & Xinlin Mo & Kun Duan & Yi Li, 2022. "Can Green Credit Policy Promote Firms’ Green Innovation? Evidence from China," Sustainability, MDPI, vol. 14(7), pages 1-15, March.
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